Wednesday, March 18, 2009

Well, I guess it was inevitable.

The prevailing wisdom tells us that when we face a huge task or obstacle or project, we are supposed to break it down into manageable pieces and have at it. You can do almost anything is it doesn't look and feel so intimidating! A version of this advice is on the cover of every single women's magazine on newsstands every single month.

I guess I misinterpreted the advice. I thought it was related to things like cleaning out your dresser drawers or straightening up your file cabinet. Wrong. Given the horrible financial climate that pervades nearly every aspect of our lives, I guess it was inevitable that someone, somewhere took this advice and applied it to - you guessed it - spending money you may not have, but feeling okay about it.

I couldn't believe it but I just watched a General Motors commercial about - guess what? - financing your new car! Just like Ford, you can pay it off in just SIX SHORT YEARS. But here's their twist: why think about this in something as Pre-TARP-like as "monthly car payments." No, that's way too much money or debt to contemplate. It may make the payments look unaffordable, even to the most financially illiterate among us.

So back to the old wisdom: break it down. Break that figure down from a monthly total to a much more manageable daily expenditure. Maybe that makes it all okay. According to GM, a new car will cost you only $9.63 a day. Doesn't that sound so much better than almost $300 a month???

They make it look very accessible. Instead of buying yourself lunch, buy a car! Instead of seeing a movie on your own, buy a car!

Dear God when will this stop? Our national financial future is doomed. If we need convincing that we can afford new cars by calculating what they'll cost us on a daily basis, we can't afford them.

Now. Is that so hard?


LVCI said...

One way I've developed for self control and this works for everyone. Is not how many $'s. It's how many hours of work does it require.

* Let's say for a person making $10 an hour and assuming after taxes you net $7.50 an hour... you'd have to work 40 hours each month to make your $300 payment example. In other words 25% of your monthly work life OR 2 hours of work everyday.

* For another person earning $20 an hour, assuming your net is $14 an hour... it would take 21.5 hours or around 13.5% of your time worked OR a little more then 1hour of your work day.

Unfortunately we should all have been financially educated to think of money as a point system. You are credited for labor rendered at an agreed upon amount of points you will receive. Nothing more then that. Then from there it's no longer about money or points. It all becomes personal in-so-much as how many hours out of your life are you willing to dedicate to posses something.

Given your $300 example the total cost for the loan would cost you between 2,880 hours of work and 1,543 hours given the two wage earners I described above. That's either 72 or 38.5 work weeks out of 6 years of your limited life span.


renee said...

Thanks LVCI - it is an interesting way to look at money and what your efforts will enable you to comfortably buy.

I still shake my head over the "$9+ a day" sales pitch to buy a new car. I don't have an extra 9 bucks in my wallet seven days a week, fifty-two weeks a year. But that's what the commercial indicates you need.

But you know what?? It will convince a lot of people they can do it....